Boligkreditt

Note 1 Accounting Principles

1.1 Basis for preparation
SpareBank1 Boligkreditt AS quarterly accounts have been prepared in accordance with the International Financial Standards (IFRS). The accounts have been produced in accordance with IAS 34 reporting for a partial year. The Company’s accounting principles and calculation methods have not materially changed since the annual accounts for 2019. IFRS 16- Leases have been adopted from 1 January 2019. This standard do not have any significant impacts for SPB1 Boligkreditt AS.

The presentation currency is Norwegian Kroner (NOK), which is also the Company’s functional currency. All amounts are given in NOK thousand unless otherwise stated.

The interim financial statements are not audited.

1.2 Segments
The Company has only one segment, which is the mortage lending to reail custoomers. The segment consists of lending to private individuals and all loans have been acquired from the member banks of the SpareBank 1 alliance.

1.3 Estimates and assessments regarding the use of accounting principles
The preparation of the financial information is in accordance with IFRS and involves management’s estimates which affect the implementation of accounting principles and thereby accounting values for assets, liabilities, revenue and costs. These estimates have been described in the notes to the annual accounts for 2019.

---

Note 2 Net Interest Income

NOK 1 000					31.03.2020	31.03.2019	2019
Interest income
Interest income from, certificates, bonds and deposits					65,423	29,304	280,846
Interest income from residential mortgage loans					1,565,974	1,258,633	5,553,510
Total interest income					1,631,398	1,287,936	5,834,356
Interest expense
Interest expense and similar expenses to credit institutions					8,332	-25,124	-45,148
Interest expense and similar expenses on issued bonds					1,115,603	851,193	3,903,694
Interest expense and similar expenses on subordinated debt					12,808	12,165	48,356
Recovery and Resolution Fund *					12,550		-
Other interest expenses					2,458	2,155	51,406
Total interest expense					1,151,751	840,389	3,958,307
Net interest income					479,646	447,547	1,876,048

 

* From 2019, SPB1 Boligkreditt has been incorporated into the Norwegian Bank Recovery and Resolution Fund.

 

---

Note 3 Net Gains from Financial Instruments

NOK 1 000					31.03.2020	31.03.2019	2019
Net gains (losses) from financial liabilities (1)					-5,423,471	-2,566,964	-6,958,008
Net gains (losses) from financial derivatives, hedging liabilities, at fair value, hedging instrument (1,3)					3,870,659	2,868,452	6,990,649
Net gains (losses) from financial assets (2)					1,297,123	-316,984	-272,077
Net gains (losses) from financial derivatives, hedging assets, at fair value, hedging instrument (2,3)					-28,098	30,886	68,140
Net gains (losses)					-283,788	15,390	-171,295

(1) The Company utilizes hedge accounting as defined in IFRS for issued fixed rate bonds (covered bonds) with derivatives (swaps) which hedges fixed rates to floating and foreign currencies to Norwegian kroner. The hedges are individually tailored to each issued bond and exactly matches the cash flows and duration of the issued bonds. Some liabilities in foreign currency are hedged with natural hedges (corresponding assets in the same currency) and this may cause the valuation differences between assets and liabilities. There may also be valuation differences between liabilities and hedges due to the the amortization of issuance costs and bonds issued at or below par value.

(2) SpareBank 1 Boligkreditt AS manages its liquidity risk by refinancing its outstanding bonds ahead of expected maturities and keeping proceeds as a liquidity portfolio. The majority of this portfolio is valued according to observed market values (fair value). Fixed rate bonds and bonds in other currencies than Norwegian kroner are hedged using swaps. These positions are valued at fair value though differences may occur because the valuation of the bonds include a credit risk/spread element which the swaps do not contain. Included in assets in the table are also investments which are hedged with natural currency hedges, as well as investments in short term, highly rated bonds from funds received from swap counterparties for collateral purposes. Such investments do not have a corresponding value change in swap hegdes

(3) All derivatives are valued at fair value according to changes in market interest rates and foreign exchange rates. Changes in valuations from the previous period is accounted for in profit and loss.

---

Note 4 Salaries and Remuneration

NOK 1 000						31.03.2020	31.03.2019	2019
Salary						2,925	2,518	9,682
Salaries reinvoiced to SpareBank1 Næringskreditt*						-944	-709	-2,772
Pension expenses						551	513	1,727
Social insurance fees						552	458	2,536
Other personnel expenses						70	54	606
Total salary expenses						3,154	2,835	11,780
Average number of full time equivalents (FTEs)						7	6	7

 

* The company’s employees have shared employment between SpareBank 1 Næringskreditt and SpareBank 1 Boligkreditt. All remuneration is effectuated through SpareBank 1 Boligkreditt and a portion is reinvoiced to SpareBank 1 Næringskreditt. The company also buys administrative services from SpareBank 1 SMN and SpareBank 1 Gruppen. Pension benefit obligations are covered in SpareBank 1 Boligkreditt through participation in the pension fund of SpareBank 1 SMN. This pension scheme meets the legal demands on mandatory occupational pension.

 

Note 5 Other Operating Expenses

NOK 1 000					31.03.2020	31.03.2019	2019
IT and IT operations					3,280	2,678	11,775
Purchased services other than IT					2,848	2,363	10,159
Other Operating Expenses					577	220	2,097
Depreciation on fixed assets and other intangible assets					89	82	328
Total					6,794	5,344	24,359

---

Note 6 Other Assets

NOK 1 000					31.03.2020	31.03.2019	2019
Intangible assets					297	625	379
Fixed assets					377
Account receivables from SpareBank 1 Næringskreditt AS					1,146	621	499
Other					11	555	12
Total					1,831	1,801	890

---

Note 7 Residential mortage loans

Lending to customers are residential mortgages only. The mortgages generally have a low loan-to-value and losses have been very low. The total amount of lending to customers at the end of 31.03.2020 were NOK 199,6 billion. All mortgages carry a variable interest rate.

NOK 1 000					31.03.2020	31.03.2019	2019
Revolving loans - retail market					43,720,736	45,215,673	42,431,353
Amortising loans - retail market					155,754,047	142,772,983	148,660,350
Accrued interest					233,652	197,973	229,402
Total loans before specified and unspecified loss provisions					199,708,435	188,186,629	191,321,105
Stage 1					192,182,539	181,894,510	183,557,607
Stage2					7,525,896	6,292,119	7,763,498
Stage 3					-	-	-
Gross loans					199,708,435	188,186,629	191,321,105
Impairments on groups of loans
Expected credit loss, stage 1					1,255	1,712	1,068
Expected credit loss, stage 2, no objective proof of loss					19,725	13,120	10,695
Expected credit loss, stage 3, objective proof of loss					-		-
Total net loans and claims with customers					199,687,454	188,171,797	191,309,342
Liability
Unused balances under customer revolving credit lines (flexible loans)					12,536,488	12,444,482	12,028,316
Total					12,536,488	12,444,482	12,028,316
Defaulted loans
Defaults*					0.0 %	0.0 %	0.0 %
Specified loan loss provisions					0.0 %	0.0 %	0.0 %
Net defaulted loans					0.0 %	0.0 %	0.0 %
Loans at risk of loss
Loans not defaulted but at risk of loss					0.0 %	0.0 %	0.0 %
- Write downs on loans at risk of loss					0.0 %	0.0 %	0.0 %
Net other loans at risk of loss					0.0 %	0.0 %	0.0 %

 

*The entire customer loan balance is considered to be in default and will be included in overviews of defaulted loans when overdue instalments and interest payments are not received within 90 days or if credit limits on revolving loans are exceeded for 90 days or more.

 

---

Note 8 Share Capital and Shareholder Information

						List of shareholders as of 2020
						No of Shares	in per cent	Share of votes
SpareBank 1 Østlandet						16,961,710	22.29 %	22.29 %
SpareBank 1 SMN						15,898,802	20.89 %	20.89 %
SpareBank 1 Nord-Norge						14,190,446	18.65 %	18.65 %
BN Bank ASA						5,126,131	6.74 %	6.74 %
SpareBank 1 BV						4,776,009	6.28 %	6.28 %
Sparebanken Telemark						3,592,816	4.72 %	4.72 %
SpareBank 1 Ringerike Hadeland						3,486,683	4.58 %	4.58 %
SpareBank 1 Østfold Akershus						3,439,512	4.52 %	4.52 %
SpareBank 1 Nordvest						1,709,929	2.25 %	2.25 %
SpareBank 1 SR-Bank ASA						1,679,661	2.21 %	2.21 %
SpareBank 1 Modum						1,592,003	2.09 %	2.09 %
SpareBank 1 Søre Sunnmøre						1,023,992	1.35 %	1.35 %
SpareBank 1 Gudbrandsdal						1,012,200	1.33 %	1.33 %
SpareBank 1 Hallingdal Valdres						982,718	1.29 %	1.29 %
SpareBank 1 Lom og Skjåk						632,870	0.83 %	0.83 %
Total						76,105,482	100 %	100 %

 

The share capital consists of 76 105 482 shares with a nominal value of NOK 100

 

Hybrid capital

NOK 1000		ISIN	Interest rate	Issued year	Call option	31.03.2020	31.03.2019	2019
Perpetual
Hybrid (Tier 1 capital instrument)		NO0010713746	3M Nibor + 310 bp	2014	09.05.2019		-	-
Hybrid (Tier 1 capital instrument)		NO0010745920	3M Nibor + 360 bp	2015	23.09.2020	300,000	300,000	300,000
Hybrid (Tier 1 capital instrument)		NO0010746191	3M Nibor + 360 bp	2015	29.09.2020	180,000	180,000	180,000
Hybrid (Tier 1 capital instrument)		NO0010767643	3M Nibor + 360 bp	2016	22.06.2021	250,000	250,000	250,000
Hybrid (Tier 1 capital instrument)		NO0010811318	3M Nibor + 310 bp	2017	01.12.2022	100,000	100,000	100,000
Hybrid (Tier 1 capital instrument)		NO0010850621	3M Nibor + 340 bp	2019	30.04.2024	350,000	350,000	350,000
Book value						1,180,000	1,180,000	1,180,000

 

The issued bonds listed in the table abowe have status as Tier 1 capital instruments in the Company's capital coverage ratio.

 

---

Note 9 Liabilities incurred by issuing Securities

NOK 1 000						Nominal value* 31.03.2020	Nominal value* 31.03.2019	Nominal value* 2019
Senior unsecured bonds						-	104,000	-
Repurchased senior unsecured bonds						-		-
Covered bonds						203,483,439	189,901,982	201,758,203
Repurchased Covered bonds						-2,900,000		-
Total debt incurred by issuing securities						200,583,439	190,005,982	201,758,203

 

* Nominal value is incurred debt at exchange rates (EUR/NOK and USD/NOK) at the time of issuance

 

NOK 1 000						Book value 31.03.2020	Book value 31.03.2019	Book value 2019
Senior unsecured bonds						-	104,000	-
Repurchased senior unsecured bonds						-		-
Covered bonds						241,829,641	206,499,842	216,579,429
Repurchased covered bonds						-2,900,000		-
Activated costs incurred by issuing debt						-202,691	-191,373	-184,635
Accrued interest						1,085,079	1,034,805	1,275,284
Total debt incurred by issuing securities						239,812,029	207,447,274	217,670,078

 

Liabilities categorized by debt instrument and year of maturity (nominal value*, net of repurchased bonds) NOK 1,000:

 

Senior Unsecured Bonds and notes

Due in		31.03.2020	31.03.2019	2019
2018		-		-
2019		-	104,000	-
Total		-	104,000	-

Covered bonds

Due in		31.03.2020	31.03.2019	2019
2019		-	14,628,056	-
2020		8,461,000	24,963,500	20,035,500
2021		29,123,936	28,857,334	28,881,382
2022		41,349,200	38,749,200	38,749,200
2023		30,777,750	30,314,900	30,356,650
2024		24,232,723	13,873,539	23,451,428
2025		15,898,750	10,648,750	10,648,750
2026		22,710,000	12,185,000	22,210,000
2027		706,730	669,702	673,042
2028		2,712,800	2,562,800	2,562,800
2029		24,368,050	12,206,700	23,946,950
2038		242,500	242,500	242,500
Total		200,583,439	189,901,982	201,758,203
Total		200,583,439	190,005,982	201,758,203

 

* Nominal value is incurred debt at exchange rates (EUR/NOK, USD/NOK, SEK/NOK and GBP/NOK) at the time of issuance

 

Debt incurred by currency (book values at the end of the period)

NOK 1 000						31.03.2020	31.03.2019	2019
NOK						66,837,851	60,898,229	59,978,539
EUR						162,837,648	127,027,740	148,733,048
USD						-	10,748,275	0
GBP						9,856,979	8,518,367	8,706,679
SEK						279,551	254,663	251,812
Total						239,812,029	207,447,274	217,670,078

---

Note 10 Subordinated Debt

>

NOK 1000	ISIN	Interest rate	Issued year	Call option from	Maturity	Nominal amount	31.03.2020	31.03.2019	2019
With maturity
Subordinated debt (Tier 2 capital instrument)	NO0010704109	3M Nibor + 225 bp	2014	07.03.2019	07.03.2024	475,000	-		-
Subordinated debt (Tier 2 capital instrument)	NO0010826696	3M Nibor + 153 bp	2018	22.06.2023	22.06.2028	250,000	250,000	250,000	250,000
Subordinated debt (Tier 2 capital instrument)	NO0010833908	3M Nibor + 180 bp	2018	08.10.2025	08.10.2030	400,000	400,000	400,000	400,000
Subordinated debt (Tier 2 capital instrument)	NO0010835408	3M Nibor + 167 bp	2018	02.11.2023	02.11.2028	475,000	475,000	475,000	475,000
Subordinated debt (Tier 2 capital instrument)	NO0010842222	3M Nibor + 192 bp	2019	24.01.2024	24.01.2029	300,000	300,000	300,000	300,000
Accrued interest							8,354	6,965	8,439
Book value							1,433,354	1,431,965	1,433,439

 

The issued bonds listed in the table above have status as Tier 2 capital instruments in the Company's capital coverage ratio.

 

---

Note 11 Financial Derivatives

NOK 1 000						31.03.2020	31.03.2019	2019
Interest rate derivative contracts
Interest rate swaps
Nominal amount						61,666,676	63,762,456	55,698,553
Asset						2,955,710	2,302,857	2,067,884
Liability						-279,216	-388,176	-332,246
Currency derivative contracts
Currency swaps
Nominal amount						158,076,919	134,876,663	145,222,180
Asset						35,944,833	15,144,499	14,186,570
Liability						-	-35,301	-542,709
Total financial derivative contracts
Nominal amount						219,743,595	198,639,118	200,920,732
Asset						38,900,544	17,447,357	16,254,454
Liability						-279,216	-423,477	-874,955

 

All derivative contracts exist for the purpose of hedging changes in interest rates and currency exchange rates.

 

* Change due to basis swap spread adjustment						31.03.2020	31.03.2019	2019
Asset/Liability						-279,216	-423,477	-874,955
Net gain (loss) on valuation adjustment of basisswap spreads						-441,652	-625,286	-545,419
Net asset (+) / liability (-) derivatives						-720,868	-1,048,763	-1,420,374

 

Basis swaps are currency swaps and are entered into at a certain cost (spread) between SpareBank 1 Boligkreditt and banks which offer such swaps and which have signed an ISDA agreement with the Company. Changes in the cost are valued each quarter across all of the Company's swaps in accordance with the IFRS rules. An increase in the cost would result in an increase in the value of the basisswaps while a cost decrease would reduce the value of the basis swaps. The effect may be material from quarter to quarter because the Company's portfolio of swaps is extensive. All basisswap value changes will reverse over time towards the point of termination of the swaps. Changes in basis swap valuations are not included in net income, but is included in other comprehensive income and in equity

 

---

Note 12 Classification of Financial Instruments

NOK 1 000			Financial instruments accounted for at fair value *	Financial assets and debt accounted for at amortised cost	Non-financial assets and liabilities	31.03.2020
Assets
Lending to and deposits with credit institutions			-	4,471,962	-	4,471,962
Certificates and bonds			38,793,444	-	-	38,793,444
Residential mortgage loans			-	199,687,454	-	199,687,454
Financial derivatives			38,900,544	-	-	38,900,544
Defered tax asset			-	-	233,644	233,644
Other assets			-	-	1,831	1,831
Total Assets			77,693,988	204,159,416	235,474	282,088,878
Liabilities
Debt incurred by issuing securities			194,190,779	45,621,250	-	239,812,029
Collateral received in relation to financial derivatives			-	27,484,900	-	27,484,900
Repurchase agreement			-	-	-	-
Financial derivatives			723,758	-	-	723,758
Deferred taxes			-	-	-	-
Taxes payable			-	-	230,533	230,533
Subordinated dept			-	1,433,354	-	1,433,354
Other liabilities			-	-	284,635	284,635
Total Liabilities			194,914,536	74,539,504	515,169	269,969,209
Total Equity			-	1,180,000	10,939,669	12,119,669
Total Liabilities and Equity			194,914,536	75,719,504	11,454,837	282,088,878

 

*Fair value calculation according to changes in market interest rates and currencies exchange rates

 

NOK 1 000			Financial instruments accounted for at fair value *	Financial assets and debt accounted for at amortised cost	Non-financial assets and liabilities	31.03.2019
Assets
Lending to and deposits with credit institutions			-	5,111,110	-	5,111,110
Certificates and bonds			25,623,908	-	-	25,623,908
Residential mortage loans			-	188,171,797	-	188,171,797
Financial derivatives			17,447,357	-	-	17,447,357
Defered tax asset			-	-	3,484	3,484
Other assets			-	-	1,801	1,801
Total Assets			43,071,265	193,282,907	5,285	236,359,456
Liabilities
Debt incurred by issuing securities			164,224,924	43,202,350	-	207,447,274
Collateral received in relation to financial derivatives			-	14,293,278	-	14,293,278
Financial derivatives			1,048,763	-	-	1,048,763
Deferred taxes			-	-	733	733
Taxes payable			-	-	15,503	15,503
Subordinated dept			-	1,431,965	-	1,431,965
Other liabilities			-	-	164,711	164,711
Total Liabilities			165,273,687	58,927,593	180,947	224,402,227
Total Equity			-	1,180,000	10,777,229	11,957,229
Total Liabilities and Equity			165,293,687	60,107,593	10,958,176	236,359,456

 

*Fair value calculation according to changes in market interest rates and currencies exchange rates

 

---

Note 13 Financial Instruments at Fair Value

General
The interest rate curve that is used as input for fair value valuations of hedging instruments and hedging objects consists of the NIBOR-curve for maturities less than one year. The swap-curve is used for maturities exceeding one year.

Interest rate and currency swaps
Valuation of interest rate swaps at fair value is done through discounting future cash flows to their present values. Valuation of currency swaps will also include the element of foreign exchange rates.

Bonds
Valuation of bonds at fair value is done through discounting future cash flows to present value.

With effect from 2009 SpareBank 1 Boligkreditt AS has implemented the changes in IFRS 7 in relation to the valuation of financial instruments as of the date of the financial accounts. The changes require a presentation of the fair value measurement for each Level. We have the following three Levels for the fair value measurement:

Level 1: Quoted price in an active market. Fair value of financial instruments which are traded in active markets are based on the market price at the balance sheet date. A market is considered to be active if the market prices are easily and readily available from an exchange, dealer, broker, industry group, pricing service or regulating authority and that these prices represent actual and regular market transactions on an arm's length basis.

Level 2: Valuation based on observable factors. Level 2 consist of instruments which are not valued based on listed prices, but where prices are indirectly observable for assets or liabilities, but also includes listed prices in not active markets.

Level 3: The valuation is based on factors that are not found in observable markets (non-observable assumptions). If valuations according to Level 1 or Level 2 are not available, valuations are based on not-observable information. The Company has a matter of principle neither assets nor liabilities which are valued at this level.

The following table presents the company’s assets and liabilities at fair value as of 31.03.2020

NOK 1 000				Level 1	Level 2	Level 3	Total
Certificates and bonds				30,106,057	8,687,386	-	38,793,444
Financial Derivatives				-	38,900,544	-	38,900,544
Total Assets				30,106,057	47,587,930	-	77,693,988
Debt incurred by issuing securities				-	194,190,779	-	194,190,779
Financial Derivatives				-	723,758	-	723,758
Total Liabilities				-	194,914,536	-	194,914,536

The following table presents the company’s assets and liabilities at fair value as of 31.03.2019

NOK 1 000				Level 1	Level 2	Level 3	Total
Certificates and bonds				17,769,351	7,854,557	-	25,623,908
Financial Derivatives				-	17,447,357	-	17,447,357
Total Assets				17,769,351	25,301,914	-	43,071,265
Debt incurred by issuing securities				-	164,244,924	-	164,244,924
Financial Derivatives				-	1,048,763	-	1,048,763
Total Liabilities				-	165,293,687	-	165,293,687

---

Note 14 Other Liabilities

NOK 1 000					31.03.2020	31.03.2019	2019
Employees tax deductions and other deductions					456	308	548
Employers national insurance contribution					596	583	645
Accrued holiday allowance					1,188	1,183	994
Commission payable to shareholder banks					124,185	118,922	126,813
Deposits*					3,922	425	2,471
Pension liabilities					11,633	10,711	11,383
Expected credit loss unused credit lines (flexible loans)					52		34
Other accrued costs					142,603	32,579	5,368
Total					284,635	164,711	148,256

 

The Company does not have an overdraft facility or a revolving credit facility as of 31.03.2020
* Deposits represents temporary balances paid in by customers in excess of the original loan amount

 

---

Note 15 Asset Coverage Test

The asset coverage is calculated according to the Financial Services Act § 2-31 (Covered Bond Legislation). There is a difference between this asset coverage test and the amounts in the balance sheet; for the purposes of the test mortgage loans which may have migrated above the 75% loan to value level are adjusted. Only that part of the mortgage loan corresponding to a loan to value up to 75% of the collateral is considered. Market values are used for all substitute collateral in the test. In addition any defaulted loans, i.e. loans in arrears at or beyond 90 days, are excluded from the test.

NOK 1 000					31.03.2020	31.03.2019	2019
Covered Bonds					242,915,442	207,534,245	217,833,870
Total Covered Bonds					242,915,442	207,534,245	217,833,870
Residential mortgage loans					198,214,563	186,789,041	190,250,177
Public sector, SSA bond exposure					1,208,564	2,145,109	357,901
-of which allocated to LCR					50,455	-	-
Reverse repo/ depo less than 100 days					1,888,263	684,236	5,254,080
-of which allocated to LCR					-	-	-
Exposure to credit institutions (covered bonds)					13,094,122	14,355,785	15,521,382
-of which allocated to LCR					125,370	-	-
Derivatives					38,621,328	17,023,879	15,379,500
Total Cover Pool					252,851,014	220,998,051	226,763,040
Asset-coverage					104.1 %	106.5 %	104.1 %
Cover pool including amounts allocated to LCR					253,026,839
Assets-coverage including amounts allocated to LCR					104.2 %

Liquidity Coverage Ratio (LCR)					31.03.2020	31.03.2019	2019
Liquid assets					27,574,549	7,238,905	14,680,356
Cash outflow next 30 days					11,750,954	1,953,120	12,605,694
LCR ratio					234.7 %	370.6 %	116.5 %

Net Stable Funding Ratio (NSFR)					31.03.2020	31.03.2019	2019
Available amount of stable funding					233,818,645	196,182,838	206,882,321
Required amount of stable funding					213,236,883	202,337,141	198,323,077
NSFR ratio					109.7 %	103.1 %	104.3 %

---

Note 16 Capital Adequacy

Transitional rules have been implemented by the FSA whereby regulated financial institutions with approved IRB models will not be able to fully benefit from the results of such models. Regulated entities are allowed to reduce by 20 per cent the total sum of risk weighted assets which would otherwise have been in place under the previous Basel I framework.

The European Union has approved new regulatory requirements, CRD IV, which is implemented in Norway. The requirement of 14.5 per cent total capital for SpareBank 1 Boligkreditt includes:

• Minimum core equity Pillar 1: 4.5 per cent.
• Additional Tier 1 equity capital 1.5 per cent. and additiponal Tier 2 capital 2.0 per cent (can be held as Tier 1 and Tier 2, alternatively as core equity capital)
• Conservation buffer: 2.5 per cent core capital
• Systemic risk buffer: 3 per cent. core equity
• Countercyclical buffer: 1.0 per cent. core equity

The Issuer has an additional Pillar 2 requirement which is 0.9 per cent. core equity capital. The total requirement for the Issuer is therefore to have capital of minimum 15.4 per cent of risk weighted assets. With a management buffer added, the target for capital coverage is 15.8 per cent at at 31 March 2020.

The Company's parent banks have committed themselves to keep the Company's Equity Tier 1 capital at the minimum regulatory level (in the Shareholders Agreement). Primarily this commitment is pro rata according to the ownership stakes in the Company, but it is a joint and several undertaking if one or more ownership banks are unable to comply, up to the maximum of twice the initial pro rata amount.

Capital. NOK 1 000					31.03.2020	31.03.2019	2019
Share capital					7,610,548	7,470,548	7,610,548
Premium share fund					3,807,922	3,737,922	3,807,922
Other equity capital					-478,801	-511,486	-317,602
Common equity					10,939,669	10,696,984	11,100,868
Intangible assets					-297	-625	-379
Declared share dividend					-	-	-90,566
100% deduction of expected losses exceeding loss provisions IRB (CRD IV)					-403,839	-365,982	-420,879
Prudent valuation adjustment (AVA)					-18,106	-18,498	-16,639
Deferred taxes					-45,336	-	-
Core equity capital					10,472,092	10,311,879	10,572,406
Hybrid bond					1,180,000	1,180,000	1,180,000
Tier 1 equity capital					11,652,092	11,491,879	11,752,406
Supplementary capital (Tier 2)					1,425,000	1,425,000	1,425,000
Total capital					13,077,092	12,916,879	13,177,406

Minimum requirements for capital. NOK 1 000					31.03.2020	31.03.2019	2019
Credit risk					3,887,930	3,504,996	3,711,268
Market risk					-	-	-
Operational risk					59,537	58,499	59,537
Depreciation on groups of loans					-	-	-
CVA Risk					538,319	332,820	329,561
Difference in capital requirement resulting from transitional floor					-	2,345,038	-
Minimum requirement for capital					4,485,786	6,241,353	4,100,367

Capital coverage

					31.03.2020	31.03.2019	2019
Risk-weighted assets incl. transitional floor*					56,072,328	78,016,911	51,254,583
Capital coverage (requirement w/all buffers, 16.3%)					23.32 %	16.56 %	25.71 %
Tier 1 capital coverage (requirement w/all buffers, 14.3%)					20.78 %	14.73 %	22.93 %
Core capital coverage (requirement w/all buffers, 12.8%)					18.68 %	13.22 %	20.63 %
Leverage ratio (requirement 3.0%)					4.54 %	4.99 %	5.05 %

* The EU capital adequacy framework (CRR/CRDIV) was incorporated into Norwegian law with effect from 31 December 2019 and the transitional floor for risk weighted assets was accordingly removed at the same time.

---

Note 17 Related parties

SpareBank 1 SR-Bank ASA
The Company purchases a substantial amount of their support functions from SpareBank 1 SMN. A complete SLA is established between the Company and SpareBank 1 SMN.

SpareBank 1 - Alliance
In addition the Company has a Transfer and Servicing agreement in place with each individual shareholder bank regulating amongst other things the servicing of mortgage loans.

SpareBank 1 Næringskreditt AS
All employees within SpareBank 1 Boligkreditt AS are also to various degrees working for SpareBank 1 Næringskreditt AS. Twenty percent of the administrative expenses in SpareBank 1 Boligkreditt AS to be charged to SpareBank 1 Næringskreditt AS. This division of administrative expenses between the two companies reflect the actual resources utilisation in SpareBank 1 Boligkreditt AS

---

Note 18 Collateral received

These institutions post collateral in the form of cash deposits to SpareBank 1 Boligkreditt. At the end of the period 31.03.2020 this collateral amounted to NOK 27 484 million. This amount is included in the balance sheet, but represents restricted cash. According to signed ISDA and CSA agreement, it is not permitted for the parties in derivatives transactions to net amounts amongst various transactions.

---

Note 19 Contingencies and Events after Balance Sheet Date

SpareBank 1 Boligkreditt AS is not a party to any ongoing legal proceedings.

No events have taken place after the balance sheet date which are expected to have any material impact on the financial statements as of the end of the period 31.03.2020.